Can I put Mom's money in my account?

1 answer | Last updated: Jul 02, 2010
Trying hard asked...

I care long distance for my Mom. She recently got an insurance settlement for a sewer backup in the basement. I would like to put this money aside to redo the basement prior to future house sale. Can I put it in my account so it's not under her Social Security number? Both our names are on the check.

Expert Answers

First and foremost, you need your mother's permission to put the money in your account. If she does give you permission, she should do so in writing -- a simple signed and dated note would do -- explaining that the money is to go to your account but is to be used to pay for repairs or improvements to her house.

The next point is that if you do put the money in your account, you can only spend it for a purpose your mother approves.That could be for house repairs or improvement, or for something else your mother wants to spend it on.The point is that it's your mother's money, not yours, so it may only be spent in a way that your mother wants, and that she says she wants. Whatever that turns out to be, to protect yourself you should make sure to get your mother to give you specific permission, in writing, to spend the money in a particular way.

Finally, there's the question of why you want to avoid having the money connected to your mother's Social Security number. If you're worried about taxes, the money's probably not subject to income tax because it's compensation for a loss rather than income. Even so, she might be required to report the settlement money on her tax return. If she is required to report the money but she fails to do so, you and she both might run afoul of the IRS. You should consult with a tax accountant or tax lawyer about her tax obligations regarding the money.

If you're trying to "hide" the money from consideration by a public assistance program like Medicaid or Supplemental Security Income, which your mother might apply for, doing so could put both you and your mother in jeopardy.If the money would otherwise be in your mother's bank account when she applies for government assistance based on need (such as for Medicaid coverage of long-term care), then hiding the money in your account might be considered fraud against the government. That might risk all kinds of legal consequences for you and your mother, including denial of assistance to her that she might otherwise be entitled to.